Capital, Secondary Circuit of

Capital, Secondary Circuit of IN: The Blackwell Encyclopedia of Sociology, 2020 https://doi.org/10.1002/9781405165518.wbeosc003.pub2 Callum Ward, Bartlett School of Planning, University College London, [email protected] Marx focused on capital as an accumulation process. Whereas in previous economic systems money served as a means of exchange of goods (Commodity -> Money -> Commodity), this relationship is inverted under capitalism so that goods are exchanged with the aim of making a monetary return (M – C – M’). This ‘general formula for capital’ is a unity of two antithetical phases, M – C (production) and C – M (purchase). These phases map onto Marx’s understanding of capital as metamorphising through distinct circuits: the first one of production in which a commodity is imbued with surplus value through labour, a second circuit of commodity circulation in which this value is realised through exchange, and a circuit of money capital mediating these transformations. The secondary circuit of circulation and consumption consists of unproductive labour in the sense that it realises surplus value but does not create it. And yet this ‘unproductive’ labour is productive labour’s precondition: for Marx, value is created only through ‘socially necessary labour time’, in which ‘socially necessary’ entails that more labour than the average necessary amount is not expended and that the product can be realised in exchange. Typical of Marx’s dialectical logic, then, circulation is both antithetical to production and internal to its very definition. This tension was traditionally somewhat overlooked due to a tendency to focus on Volume 1 of Capital (about production) and ignore Volume 2 (about circulation) and so view circulation as epiphenomenal to production. Yet for those concerned with spatial theory the organisation of socioeconomic flows under capitalism is of utmost importance, and the secondary circuit the conceptual entry-point. Henri Lefebvre (1970; 1974) opened up this line of inquiry in his pioneering work on the production of space. Rejecting thendominant structuralist approaches which saw cities as superstructural spaces of consumption to the real base of production, Lefebvre held that space is itself a relation of production. Relatedly, he argued against the simple class struggle binary of proletariat vs bourgeoisie by pointing to the importance of real estate to modern capitalism. Here his claim was that because landed property (and property capital more broadly, i.e., developers) on rent rather than industrial profit they form an independent class interest. Furthermore, not only does the secondary circuit therefore have its own autonomous dynamics but it is an increasingly dominant driver of the dynamics of capitalism. Indeed, he asserted that in the 20th Century industrial society was negating itself through the emergence of a globalised urban society. Although expressing reservations about Lefebvre’s thesis of urban society supplanting the industrial, David Harvey (1982) offered a parallel set of arguments developing the concept of a secondary circuit of capital. In Harvey’s schema, capital investment is driven into the secondary circuit due to ‘overaccumulation’ in the primary circuit when it is unable to turn over within an acceptable time. As such, mediated by financial speculation, capital ‘switches’ from the shorter turnover times of production into the longer turnover times of the built environment – fixed capital, real estate and infrastructure. This can absorb significant amounts of capital and produce fantastic profits in the financial sector while, in turn, expanding the scope for investment in the primary circuit through the opening up of new markets, stimulation of consumption or quickening of circulation. In this way, the secondary circuit offers a ‘spatial fix’ for the crises of capitalism as the built environment absorbs investment. Harvey’s reading of the secondary circuit has had wide-reaching impact on urban studies in showing how structural instabilities of capitalism shape uneven development. The concept has been utilised extensively by scholars interested in the financialisation of real estate, especially in the aftermath of the 2007-09 financial crisis with its roots in the US housing market (Gotham 2012). However, Harvey’s emphasis on crisis in the primary circuit as a structural cause of investment dynamics into the secondary has been the object of extensive criticism informed by wider structure-agency debates, notably Gottdeiner’s (1994) Lefebvre-inspired critique that the independence of real estate developers and local institutions means the secondary circuit has its own dynamics not reducible to the wider logics of capital. For the critical literature on urbanisation and real estate bubbles where the term ‘secondary circuit’ has been most utilised, the salient distinction between the primary and secondary circuits of capital is the different turn-over times of capital in each. The nature and significance of the circuits’ demarcation of productive/unproductive labour, however, has also had profound ramifications across the social sciences. Notably, rejection of the productive/unproductive dichotomy became a basis of feminist arguments that immaterial labour and affective labour are productive of value through the facilitation of social reproduction (Federici 1975). In recent years, social reproduction theorists have more explicitly drawn on the terminology of the secondary circuit of capital as the arena in which labour-power is produced and, therein, theorised how gender and racial oppression are constitutive of capitalism (Bhattacharya 2017). The secondary circuit of capital is also increasingly being adopted as a framing through which to integrate analysis of the exploitation of nature into that of capitalist urbanisation. Scholars engaged with this have sought to tease out the ecological implications of Harvey’s spatial fix thesis (Ekers and Prudham 2017) and utilise the concept of circuits to theorise resource extraction in relation to Lefebvre’s concept of planetary urbanisation (Arbeloda 2020). In an era of globalised real estate bubbles, ecological breakdown and resurgent reactionary movements, the secondary circuit of capital remains the political economic window through which to view distributional struggles not as epiphonema, but fundamental to the dynamics of capitalism and its crises. See also: Materialist Feminisms; Marx, Karl (1818-1883); Neo-Marxism; Radical Feminism; Uneven Development; Urban Political Ecology; Urban Political Economy; Urban Renewal and Redevelopment; Urban Revolution; Urban Space; Value References Arbeloda, M. 2020. Planetary Mine: Territories of Extraction under Late Capitalism. London: Verso Bhattacharya, T. 2017. Social Reproduction Theory: Remapping Class, Recentering Oppression London: Pluto Ekers, M. & Prudham, S. 2017. The Metabolism of Socioecological Fixes: Capital Switching, Spatial Fixes, and the Production of Nature. Annals of the American Association of Geographers, 107:6, 1370-1388 Federici, S. 1975. Wages Against Housework. Bristol: Falling Wall Press and the Power of Women Collective. Gotham, K.F. 2012. ‘Creating Liquidity Out of Spatial Fixity: The Secondary Circuit of Capital and the Restructuring of the US Housing Finance System’ in, Sub-Prime Cities: The Political Economy of Mortgage Markets ed. M. Aalbers, 25-52, Oxford: Wiley-Blackwell. Gottdeiner, M. 1994. The Social Production of Space. Austin: University of Texas Press Harvey, D. 1982. The Limits to Capital. Oxford: Basil Blackwell. Lefebvre, H. 1970. The Urban Revolution. (Bononno, R. trans) Minnesota: University of Minnesota Press. Lefebvre, H. 1974 [1991]. The Production of Space. (Nicholson-Smith, D. trans) Oxford: Blackwell Publishing Marx, K. (1976) Capital: A Critique of Political Economy Volume 1 (Fowkes, B. trans) London: Penguin Classics Marx, K. (1976) Capital: A Critique of Political Economy Volume 2 (Fowkes, B. trans) London: Penguin Classics